Through the legal process of bankruptcy, people can be freed from the majority of their debts. A Trustee will inventory your assets during the bankruptcy process and may sell part of them to pay creditors. Most of your debts are discharged when the bankruptcy term is through, allowing you to start over. If you are having major financial problems, declaring bankruptcy is a frequent approach to pay off your debts, and it has a number of important advantages. In this post, we’ll look at bankruptcy and how it can help you deal with debt and financial problems.
Advantages of Bankruptcy
An impartial trustee will oversee the proceedings if your bankruptcy case is approved. The trustee will evaluate your income, possessions, debts, and other obligations in order to create a strategy that benefits all parties.
Bankruptcy has a few significant advantages for people who are having financial difficulties:
- Except for debts like court fines, child support, and HECS/HELP obligations, the majority of unsecured debts are forgiven.
- To help you start over, you keep some of your possessions. A bankrupt is permitted to keep their primary car, as long as certain conditions are met, as well as things like their personal computer and phone.
- Once you file for bankruptcy, your creditors cannot contact you. Your trustee will be the conduit for any communications from your creditors.
- Freedom from ongoing payments that were previously owed to creditors is one benefit of bankruptcy.
- A study from Melbourne University revealed that bankruptcy had considerable personal advantages in addition to financial ones. The study’s participants reported improvements in their relationships, general quality of life, and physical and mental health.
The Effects of Insolvency
The decision to file for bankruptcy will significantly alter your life. While it will assist you in getting relief from your creditors, it also has long-term consequences that should be carefully considered:
- Future credit applications may be impacted by bankruptcy. You will be obligated to notify your bankruptcy trustee for credit applications that are for more than a certain amount.
- Your trustee may sell your possessions, such as real estate like houses and vehicles. Ordinary home items, instruments used to make a living, and automobiles up to a certain value are all allowed to be kept.
- For international travel, you will require your trustee’s approval.
- You could have to pay your trustee if your income exceeds a specified threshold.
- Additionally, bankruptcy may limit your capacity to work or operate a business.
- You will have a record of your information on the National Personal Insolvency Index (NPII). Your name, birthdate, and address will be permanently listed on the NPII, a database of Australian insolvency proceedings that is accessible to the public.
You may apply to have your address hidden from the NPII in particular circumstances, such as when your safety is in danger. Your name and birthdate cannot be changed or obscured.
Who Can Declare Bankruptcy?
In Australia, a person cannot file for bankruptcy unless they meet two requirements. You have to:
- Personal insolvency, or not being able to pay your debts when they’re due,
- You must live in Australia or have a business or residential relationship there (such as maintaining an Australian address).
There is no minimum or maximum debt or income that one must have to qualify for bankruptcy. You must speak with your administrator before filing for bankruptcy if you are a party to a Debt Agreement under Part IX of the Bankruptcy Act 1966. Before applying, your Debt Agreement must be canceled.
To learn more about the bankruptcy process, get in touch with CrossRoads right away. Call 0410 555 999 for further information.